Sallie Mae 2006 Annual Report Download - page 7
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formula. We refer to the fixed spread to the underlying index as the SAP spread. For loans disbursed after
April 1, FFELP loans effectively only earn at the SAP rate, as the excess interest earned when the borrower
rate exceeds the SAP rate (Floor Income) must be refunded to ED.
Variable rate PLUS Loans and SLS Loans earn SAP only if the variable rate, which is reset annually,
exceeds the applicable maximum borrower rate. For PLUS loans disbursed on or after January 1, 2000, this
limitation on SAP was repealed effective April 1, 2006.
Title IV Programs and Title IV Loans — Student loan programs created under Title IV of the HEA,
including the FFELP and the FDLP, and student loans originated under those programs, respectively.
Variable Rate Floor Income — For FFELP Stafford student loans whose borrower interest rate resets
annually on July 1, we may earn Floor Income or Embedded Floor Income (see definitions above) based on a
calculation of the difference between the borrower rate and the then current interest rate. We refer to this as
Variable Rate Floor Income because Floor Income is earned only through the next reset date.
Wholesale Consolidation Channel — During 2006, we implemented a new loan acquisition strategy
under which we began purchasing a significant amount of FFELP Consolidation Loans, primarily via the spot
market, which augments our traditional FFELP Consolidation Loan origination process. We refer to this new
loan acquisition strategy as our Wholesale Consolidation Channel. FFELP Consolidation Loans acquired
through this channel are considered incremental volume to our core acquisition channels, which are focused
on the retail marketplace with an emphasis on our brand strategy.
Wind-Down — The dissolution of the GSE under the terms of the Privatization Act (see definitions
above).
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